BCBS D487

Definition

BCBS D487 is a document published by the Basel Committee on Banking Supervision on November 2019 in the Macroprudential category.

Title

Guiding principles for the operationalisation of a sectoral countercyclical capital buffer.

Abstract

The Basel Committee on Banking Supervision's (BCBS) Basel III standard includes a countercyclical capital buffer (CCyB) regime. National authorities can implement a CCyB requirement to ensure that the banking system has an additional buffer of capital to protect against potential future losses related to downturns in the credit cycle.

A sectoral countercyclical capital buffer (SCCyB) is a useful complement to the CCyB. While a bank's additional capital requirements following the activation of the CCyB depend on total risk-weighted assets, a SCCyB is a more targeted measure allowing national authorities to temporarily impose additional capital requirements that directly address the build-up of risk in a specific sector. The impact of a SCCyB would depend on a bank's exposure to a targeted credit segment (eg, residential real estate loans). Targeted tools such as the SCCyB may be effective to aid in building resilience early and in a specifc manner, to more efficiently minimise unintended side effects, and may be used more flexibly than broad-based tools.

These guiding principles are intended to support the implementation of a SCCyB on a consistent basis across jurisdictions. The guiding principles are not included in the Basel standards and are only applicable for those jurisdictions that choose to implement them on a voluntarily basis.

Document Profile

• Publication Date: November 2019
• Publication Type: Guidelines
• Publication Status: Current
• Publication Category: Macroprudential
• Number of Pages: 14
• Keywords:

See Also

• BIS Website: Web Page
• PDF File: Download

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